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Indian markets could open lower in line with lower Asian markets today and negative US markets on Monday - HDFC Securities

The Dow industrials and the S&P 500 Index posted their biggest one-day drops in almost two weeks as worries about monetary policy and omicron undercut investors’ recent bullishness. The Dow and Nasdaq Composite Index finished at their lowest levels in a week.

Investors will be focusing their attention on the Federal Reserve’s meeting this week, searching for details on a potentially hawkish pivot in monetary policy in the face of high inflation, strong economic growth and labor market recovery. Some investors are anticipating that Federal Reserve policy makers will pencil in enough rate hikes to take their main policy rate target to 2.5% by the end of 2024. However over the past 4 cycles (’94, ’99, ’04, ’15), the S&P 500 gained 9.5% in the twelve months prior to the first hike, and 26.0% over the subsequent 3 years, Fed Chairman Jerome Powell — whose hawkish signal during his testimony before the Senate Banking Committee at the end of November rattled markets — will hold his usual news conference Wednesday after the conclusion of the central bank’s two-day policy meeting.

India’s retail inflation rate, which is measured by the Consumer Price Index (CPI), rose to 4.91 percent during the month of November 2021.The inflation has increased sequentially, as it was recorded at 4.48 percent in October 2021. Year-on-year, however, a dip has been registered as the rate of inflation in November 2020 was 6.93 percent. The uptick on sequential basis was led by an increase in food prices, particularly vegetables. Asian stocks were largely lower Tuesday amid a host of central bank meetings, globally to arrest rise in inflation and risks to reopening due to the omicron virus strain.

Nifty ended sharply lower on Dec 13 despite positive global cues. At close, Nifty was down 0.82% or 143 points at 17368. In the process, Indian markets were the worst performing markets in the Asian region.

Nifty formed a bearish engulfing pattern on Dec 13. Advance decline ratio was however even. The fact that Nifty could not benefit out of the positive sentiments elsewhere is worrying. Ahead of the bunch of central bank meets this week and the approaching calendar year end, FPIs seem to be taking profits and reducing their positions. 17534 could now be the resistance while 17252 could be the support.

Daily Technical View on Nifty

Market: Observation

* Nifty has closed at the three session’s low

*  Nifty has ended the session with bearish engulfing pattern on the daily chart

* Nifty has failed to surpass the crucial resistance of 50 days EMA

* Oscillators and Indicators like RSI and MACD have turned bearish on the hourly charts

* Short term higher tops and higher bottoms are not violated yet on the short term charts

* Short term resistance for Nifty is seen at 17600-17650.

* Short term resistance for the Nifty is seen at 17150

* For confirmation of resumption of an primary uptrend, Nifty has to surpass 17900, which happens to be 61.8% retracement of the entire fall seen from 18604 to 16782.

* Traders are advised to remain nimble-footed in taking long positions in swing trading.

Nifty – Daily Timeframe chart

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